In Fairhold Mercury Limited v. Merryfield RTM Company Limited  UKUT 311 (LC) the Upper Tribunal again considered whether in house legal costs were payable to a Freeholder.
The case again involved Estates and Management Limited as agents for the freeholder who advised in respect of two Right to Manage claims. The LVT determined that the amounts claimed were reasonable but were not recoverable as they did not reflect disbursements for external advice.
It seems once again that the point taken by the LVT was not one advanced by the Respondent RTM Company and it was not put to the Appellant. As a result simply on the grounds of natural justice this decision had to be quashed.
The President went on to consider whether if there is an appointed agent and they gave advice the cost was recoverable. He very conclusively determined that the costs were recoverable and he could see no reason why they were not and given the LVT had determined that the amounts themselves were reasonable then the sums were payable.
The issue of whether in house legal costs can be recovered as been the feature in a number of cases over the past twelve months a number of which have related to Estates and Management Limited. What seems clear from this decision as that the Upper Tribunal consider it perfectly acceptable for Freeholders who employ agents to take advice from them and if they do these costs may be recoverable provided that the amounts claimed are reasonable. Certainly the price charged should be justifiable by the Agents (with reference to time spent, hourly rates and contracts etc) but in principle the sums are payable and it would seem that challenges to the pay ability per se are likely to fail.